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How New Health Care Reforms Can Affect Your Medical Debt

Submitted by Jen Jones on Sun, 03/28/2010 - 4:30pm

For all the political uncertainties about health care reform, at least one thing seems clear: when President Obama signed landmark health care legislation into law this week, it marked real changes for Americans facing medical debt.

And, as such, these changes couldn’t come at a better time. Even amid surging unemployment and mortgages underwater, health care expenses have become the primary financial breaking point for millions of Americans. According to a Harvard study recently reported in the LA Times, medical bills played a role in 62% of personal bankruptcies filed in 2007, up 7% from 2001. Most striking, a vast majority (78%) of these Chapter 7 filers actually had health insurance.

As a result, the Obama Administration is banking on a plan that extends health insurance to 32 million uninsured Americans in order to protect more people from becoming medically bankrupt in several ways:

First, parts of the plan will end co-pays for preventative health services like physicals or mammograms, making it easier and less expensive to ward off injury and illness in the long-run.

Second, other aspects of the plan prohibit lifetime and annual restrictions on benefits, providing unlimited, or, at least, less limited access to cheaper health care when and where you need it.

Third, large businesses are required to insure their employees or face possible fines until they do so. This added employer coverage may protect many Americans from the perils of being uninsured, including unexpected and acute maladies that can have lasting physical effects and financially devastating consequences for employees and the businesses that rely on them.

Fourth, the legislation will mandate that all Americans citizens have health insurance or they will be forced to pay penalty fees. While this comes as an economic imposition to some, the requirement means that not only will the insured help pay for the new plan, keeping the reforms “budget-neutral” in an already damaged economy, but also this type of comprehensive buy-in can also keep costs down for all Americans—and help keep bankruptcy at bay.

Fifth, children are no longer dropped from their parents’ plans at age 19 or at the end of college. These parental health benefits are now extended until the child’s 27th birthday; covering even more young adults and preventing medical bills from taking young people to the financial brink in an especially unfriendly job market for recent grads.

Finally, with these reforms, insurance companies can no longer use preexisting conditions to deny individual coverage or charge higher rates based on preexisting conditions, gender, or other formerly exacerbating factors.

Even though many of these reforms will take years to roll out, fortunately, the latter two reforms will go into effect this year.

And while many Republicans argue that this legislation will mean higher taxes for the wealthiest Americans, the plan is being touted as a framework for universal health care in America, giving all citizens a fair shot at avoiding insolvency due to medical matters.

Unfortunately, disease, illness and other health problems can occur suddenly and may not wait for reforms to go into effect. Regardless, health insurance is no guarantee that injuries or illness won't turn into a bracing financial burden.

If you are suffering from illness, injury and out of control debt, and considering filing a medical-related bankruptcy, it is important to understand that medical bills are considered unsecured debt and can be discharged entirely under Chapter 7 and Chapter 13. Bankruptcy may be just what you need to help you get back on your financial feet again.

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button and let these experts smoke out your next best financial steps.